I know, I'm already a member of both and have gotten two certificates in the span of a month because I was closing in on my RZ certificate total and also made the GC total with fewer purchases.Originally Posted by heybtbm
I know, I'm already a member of both and have gotten two certificates in the span of a month because I was closing in on my RZ certificate total and also made the GC total with fewer purchases.
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Gamestop is fucking retarded selling used games $5 cheaper than new. Used games should be at least $15-20 cheaper than new. Like someone mention earlier in this thread, it'll be interesting to see how long Best Buy can keep this up. Having worked in a video game store for a few years back in high school, I found out that there is a very slim markup on new games, consoles, and accessories. Usually less than $5 profit on new consoles, and $5-10 profit on new games and accessories.
Video games are a loss leader for big box stores like Best Buy and Wal Mart anyway, these stores are willing to carry these items and make virtually nothing on them in the hopes of getting people into the stores to buy something where there is a ridiculous markup like HDMI cables, universal remotes, and basically any other kind of accessory.
I wouldn't use this for NEW releases, but I've seen some great deals on older games at my local BB that would rock even harder if they were as cheap as used. Like $10 and $20 DS games lowered by $5 or more.
30%? Link please to official company documents or some verifiable source. All the numbers I've seen over the past years have put the gross margins for a game at around $8 - $10 for a new game at $50, and $10 - $12 for a new game at $60.
Did you read Amazon's recent earnings report? Their revenue was down...because of game sales. They sell 1000x more items than Best Buy. Games are important, particularly to an electronics retailer. You can use the Xbox 360 etc. to sell those big expensive screens, convincing someone it's worth it.
Gamestop can't afford to reduce margin? They don't WANT to, but they can definitely afford it. Don't have healthy new game sales? They don't sell as many games new as used, but that benefits them, since they have a 50% gross profit margin on used games vs. 20% gross profit margin on a new sale. How can BBY possibly have a higher gross profit margin on new titles than GME, which specializes in the field? Your numbers don't make any sense.
Best Buy can't compete with GME's used games. They don't have a stream of new release games like Halo 3: ODST available for $25 a copy. Unless game developers are willing to match the price of used trade-in value when selling to BBY, this program cannot possibly be profitable and will die.
This won't work for other reasons. If customers were interested in value, then they would obviously all be selling their games on eBay instead of to GME. Since this isn't the case, and GME's crap trade-in values are common knowledge, there must be some other reason people keep sticking to Gamestop...like instant gratification, lots of buy 2 get 1 deals, extra trade-in credit bonuses for new titles etc. BBY can't really compete with all that. It's not just "it's cheaper." I can get a lot of new release games for $57 new, with no tax on Amazon. That's about the same as the $55 used with tax at GME. Yet people still go to GME. Hmmm.
I don't know where you are getting your numbers from. The retail margin for large chains on video games and other consumer media is 30%. That applies to Toys R Us, Amazon, Target, Walmart and Best Buy. That's the same deal Gamestop gets on their new games. Obviously, on used sales their margin is whatever they pay for the game versus what they can sell it for. A smaller game store buying from a distributor usually only gets the 10%-15% margin you are talking about. If you spend a little time looking at the annual reports for Best Buy, game sales are less than 10% of their total sales and a little over a third of their recorded media sales. They make their money on appliances, computers, cell phones, cameras, electronics, etc....
Best Buy doesn't have to compete with Gamestop, but they are an easy target and frankly, if they even steal 5% of Gamestop's used sales, it will do significant damage. Gamestop has massive overhead with 4,000 stores and no other product lines to fall back on. They are under incredible pressure to keep delivering rising profits and any damage to that trend is going to create massive problems for them on the corporate level.
Personally, I buy most of my games from Amazon, but I know lots of people who buy from Gamestop and the only reason they do so is price. If a consumer can get the exact same game, sealed and perfect from Best Buy which is in every major area in the country today, for the same exact price as a used game from Gamestop, they are going to do it. Gamestop's only response will have to be to reduce prices further which means lower trade-in values which will have a direct impact on the number of people willing to sell to them and continue getting stuck in their circle of low TIV, store credit and the perpetual trading of games for far less than they are worth only to get another used game in poor shape.
this will be neither a success or a failure. unless there is a barrage of television ads promoting the program, few people will take advantage of the offer
bb seems to be really quick on clearing out games that dont sell vert well. these are the titles that have the biggest potential markdown with the match-gamestop-used-price service. popular games do not get much of a markdown at GS, so five dollars off a hot title for the few people that ask for it is not much of a big deal to Best Buy
You're making it sound like Gamestop competes with Amazon, and Gamestop competes with Best Buy, but Best Buy and Amazon don't compete. I'm not seeing how Amazon doesn't also lower their prices.
And anyway, the main reason people trade in games at GS is because you can get rid of anything for one of the systems they stock and get credit for it right then and there. I'm not really seeing any competitiveness on trade-in values. Even when EB was still around, the two chains weren't really competing for trade-ins (aside from the occasional extra credit deal, which GS still does). They never really advertised their trade-in values at all.
Link please with verifiable data. This article claims that GME's profit margin is 21% on new games.
Whereas this dude, who writes for 1up, claims that BBY's profit margin is 30% and that they buy games for "$40 - $46." He provides no sources, and no links to any financial statements. Hmmm.
Best Buy doesn't have a lot of overhead? They have to pay a lot of money for that floorspace. It hurts worse when the products aren't making any money or, worse, are losing money. As posted in the article I linked to, Gamestop's profit margins (gross) are 48% on used games. Even at your purported 30% profit margins (gross) on new games, which I seriously doubt given all the numbers I've seen from GME/other retail chains, this gives Gamestop a very wide cushion against BBY. BBY cannot compete with GME's pricing, period.Best Buy doesn't have to compete with Gamestop, but they are an easy target and frankly, if they even steal 5% of Gamestop's used sales, it will do significant damage. Gamestop has massive overhead with 4,000 stores and no other product lines to fall back on. They are under incredible pressure to keep delivering rising profits and any damage to that trend is going to create massive problems for them on the corporate level.
Taking a loss to drive a competitor out of the market is nothing new, but it's not something BBY is really in a position to do. As of the last financial quarterly report, GME had 230 million in cash and BBY had 535 million. Both companies, over a year ago, had more than twice as much cash as they do currently. Both still have healthy cash reserves, but they're not going to fuck around with their shrinking cash reserves in a shit economy where video games saw a big drop off for the first time in 9 years. BBY also has a lot of other areas where they might need that cash.
It's just not financially feasible or realistic. Good for consumers? Yeah, sure. But it's not gonna do BBY's bottom line one lick of good, and they can't stick with it long enough in this type of environment to really put the squeeze on GME.
It's funny; people love to beat the "Gamestop is fucked" gong whenever a competitor rises into the arena. Kind of like how people love to ring the "Microsoft Windows is losing tons of marketshare!" every time it's reported another person switched over to MacOSx. Gamestop isn't going anywhere. Amazon's used program, BBY's used program, Gamecrazy, pawn shops, downloadable games...they're all out there. Gamestop is still doing fine.
And Gamestop's market share reigns supreme over all of them, and will continue to do so. That doesn't mean they won't have to make adjustments, but some dumbass Best Buy "price match," which isn't remotely feasible, is not a threat. Not even close. I own a decent amount of Gamestop's stock, so I should have every reason to be worried, or running over to Fidelity to sell out when stuff like this comes out. But every time I look at the numbers closely, GME is the one coming out ahead. Doesn't mean it's gonna be like that forever, but BBY isn't gonna be the one to take them down. I mean, seriously, has anyone been to BBY to buy games recently? Their organization sucks, their selection is atrocious, their prices on most titles that aren't discounted are garbage...they're just not a threat at all. I'd rather go to Wal*Mart to buy games, and I fucking hate Wal*Mart.
Last edited by unwinddesign; 08-09-2009 at 01:30 AM.
Ummm, no. BBY has a few BILLION in cash. Whereas that number you gave for Gamestop is pretty close.
I went to that Best Buy yesterday and they have the regular prices still but they said they check Gamestop's used prices online then discount a game that way.
I'm sorry I can't link you to an article disclosing Best Buy's margin, but I have provided legal services to at least one start-up publisher seeking distribution of video games and I know that what we were told by the distributors we approached like Jack of All Games, Tommo, etc... was that the margin for Best Buy and Walmart is 30% and our numbers had to reflect that and also include a separate distributor margin, return allowances, etc...
I think you are confusing two separate Best Buy initiatives with this argument. I agree that Best Buy and other chains getting into used game buy backs and sales is not going to do much damage to Gamestop. However, competing with Gamestop's ridiculous skimpy discount on newer used games certainly will have an impact. It's not going to have much impact on the teenagers who come into Gamestop and trade games weekly, all the while loosing more and more equity in their games and essentially paying to rent games from Gamestop. It will, however, have a huge impact on the rest of the game buying population who buys used at Gamestop because of price.
I don't know if you realize this or not, but a lot of people hate Gamestop. From their practice of gutting games to putting stickers all over everything to trying to sell you all sorts of crap when you get to the register. It's really tough to buy gifts for people there and I've had more than one parent tell me they would never go in there again. These people are an ideal market for this promotion.
I know many, many people who only buy new games from Best Buy. I know if Amazon ever starts charging tax in my state that I will only buy from Best Buy and maybe Toys R Us. Best Buy has good sales on a regular basis and are quick to make price adjustments and cuts. They also stock mainstream and a percentage of more obscure games. Their Reward Zone, Gamer Zone and regular 10% off coupons make them price competitive with Amazon and certainly with other brick and mortar retailers.
I'm sorry that you hate Best Buy, but the reality is that this is a very creative promotion that takes Gamestop on head-on. It may not crush Gamestop, but it sure as heck can do some damage if it is expanded to all of Best Buy's 1100 stores around the US.
I posted this on another forum
I've got both a Best Buy and a Gamestop right next to me and more often than not, I find myself coming out of Best Buy empty handed more often than I do when coming out of GS. The selection at Best Buy is horrible and the pricing is the same as it is everywhere. There's only been a handful of times that they had something I wanted for a price I was willing to pay.Oy...what a boneheaded move on the part of Best Buy. I know this is only a test and being done in only one store at the moment but it still sounds like a colossally bad idea.
It would be great for them if both Gamestop and Game Crazy maintained the status quo and kept the pricing on the used copies of newer releases only $5 lower than their new counterparts. The thing I find boneheaded is that Best Buy has NO control over how either GS/GC control their used pricing.
Let's say that when Halo 3:ODST drops, GS/GC set the used price of the game at like $29.99 or something ridiculously low for like the first month or so, going so far as to even printing it (and fucking with Best Buy even further by printing the price minus the Edge Card discount). Sure, GS/GC would lose the sale on the new game but they would fucking BLEED Best Buy. I know Best Buy sells more than just video games but it's bad business if you have to have the other product lines in the store help prop up one that is costing you money hand over fist.
As for GS/GC honoring that price, well I can't speak for GC but I know GS could issue a mandate to all the stores that all used copies of the game be immediately returned to the warehouse for safekeeping until the "sale" price of the game goes back to "normal". Is it a dick move? Sure, but once a customer agrees to sell them the game, it's their property and they can do whatever the hell they want with it.
The other side of the coin is while GS/GC would lose out on the new sale of the game, it then becomes a matter of what to do with the game when the customer is tired of it and wants to get rid of it. Smart people know there's a plethora of alternatives available to them and can sell the game on their own via Ebay, Amazon, or whatever. However in my time there, I've seen many a customer who wasn't willing to exert the extra effort needed and took whatever GS was willing to give them for it. Best Buy loses out there as well since they currently do not offer any kind of a trade-in program.
While both companies are evil and vile, the nice thing is if such hardball were to be played between them, the customer is the overall winner.
I know a guy in the area who runs one of the mom and pop game stores and he relayed to me that his buy price isn't even close to what companies like GS, Best Buy, and Target get for the exact same item. A margin of 25-30% doesn't sound unreasonable but I imagine 20-25% is more a realistic number as middle men like JoAG and Tommo are looking for a slice of the pie as well and the publisher will only discount the game so much for them.
I went over this in my cut/paste. If Best Buy wanted to play hardball, GS could play hardball back. I worked for them for a few years, I know they can dig in their heels when they need to. As I stated above, Best Buy is at their mercy when it comes to the used game pricing model. They could set a stupid low price on the used copy of the game for the first month or longer and hold any copies they do get back until they return the price to "normal". They'll lose those new sales for sure, but they'll bleed Best Buy in the process. Also, if a customer did buy a game at say $29.99 'cuz GS marked it at that and then went to trade it in when they were tired of it....ooops, Best Buy doesn't buy used games. GS can advertise they'll give $25 for it and then the customer will see they're only out $5 instead of $30.I think you are confusing two separate Best Buy initiatives with this argument. I agree that Best Buy and other chains getting into used game buy backs and sales is not going to do much damage to Gamestop. However, competing with Gamestop's ridiculous skimpy discount on newer used games certainly will have an impact. It's not going to have much impact on the teenagers who come into Gamestop and trade games weekly, all the while loosing more and more equity in their games and essentially paying to rent games from Gamestop. It will, however, have a huge impact on the rest of the game buying population who buys used at Gamestop because of price.
Y'know...hate is such a strong word.I don't know if you realize this or not, but a lot of people hate Gamestop. From their practice of gutting games to putting stickers all over everything to trying to sell you all sorts of crap when you get to the register. It's really tough to buy gifts for people there and I've had more than one parent tell me they would never go in there again. These people are an ideal market for this promotion.I think it's more likely that people are aggravated and irritated at some of Gamestop's practices. The store I used to work at just got a mandate about some of the stickers. They were told that they were to no longer put stickers on the spines of the cases. It may not seem like a lot for Joe Schmoe the customer but for someone who's worked there, it's a HUGE deal. Stickering the spine of games took extra time that we already didn't have and I knew a lot of stores that applied the stickers directly to the insert, most of time this ruined the insert as the stickers wouldn't come off easy or would mangle the insert.
I know GS as a company is by no means a saint but at the same time, neither is Best Buy. One of the guys I worked with at GS went to work for Best Buy for a bit and he had some real horror stories about the place that made it seem like working for GS was the best thing in the world.
I've yet to see such "good sales and quick price adjustments and cuts" from Best Buy and I go in there on a regular basis. Like I said, more often than not I'm walking out empty handed. If those sales are indeed so great and they're selling out before I get there, it's not doing me a damn bit of good.I know many, many people who only buy new games from Best Buy. I know if Amazon ever starts charging tax in my state that I will only buy from Best Buy and maybe Toys R Us. Best Buy has good sales on a regular basis and are quick to make price adjustments and cuts. They also stock mainstream and a percentage of more obscure games. Their Reward Zone, Gamer Zone and regular 10% off coupons make them price competitive with Amazon and certainly with other brick and mortar retailers.Sure you can advertise it and what not but if you don't actually have the item in stock for purchase or have a ridiculously low amount of product that is on sale then what's the point?
I can't speak for the person you were replying to but I certainly don't hate Best Buy. I have found their gaming section to be severely lacking for quite some time now though. I also don't hold any kind of special love for GS either, even though I worked for them for years. The stuff you "hate" about them I never cared for either and if they made a few moves to fix that, a lot of the "haters" would clamp up in a hurry (yet being the nerdrage basement dwellers they are would find something else to bitch about in regards to GSI'm sorry that you hate Best Buy, but the reality is that this is a very creative promotion that takes Gamestop on head-on. It may not crush Gamestop, but it sure as heck can do some damage if it is expanded to all of Best Buy's 1100 stores around the US.)
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I don't like Best Buy OR Gamestop, but I have to tell you, GS gets most of my rage (except when I see Best Buy do something totally stupid, like put one those "spider"-type theft prevention devices around a limited edition box set like the Resident Evil 5 box where the box just totally gets crushed... man I wanted to take that game and smash in the head of the manager there w/ it). GS tho... they gut new games and sell them as new even tho they're opened, they rent "new" games out to their employees, they sticker the boxes all to hell, they sell a disc only game for the same price as one that's complete, and their prices on average suck hardcore. Best Buy can be fairly overpriced on their games, but I've also seen some decent prices on older "new" games that they were probably discounting just to make room for new stock. Every time I go into the local BB, there's new DS, PSP & PS2 games for sale for $10~15 apiece. Most of the time, that's the Amazon new price on the games anyway, but it's nice to see some competitive pricing, even if it's just on stuff they want to clear out.
I will say that I've only purchased one game from BB, but the only times I've bought games from GS was when they have B2G1 sales. Never will I buy a new game from them, and seldom would I buy a used one. Why when I have access to Ebay and Amazon where games are 10%+ cheaper?
You must live by the suckiest Best Buy in the world. A-list games are advertised for $10 under MSRP every week and are plentiful (recent example: Gear of War 2 was just in the ad two weeks ago for $29.99).I've yet to see such "good sales and quick price adjustments and cuts" from Best Buy and I go in there on a regular basis. Like I said, more often than not I'm walking out empty handed. If those sales are indeed so great and they're selling out before I get there, it's not doing me a damn bit of good.
As far as their overall selection, our two Best Buy's in town rival Gamestop. Low-print Atlus, Xseed and Nippon Ichi RPG's can be easily found. We even had PSP and DS imports a few years ago.
I don't really have anything against Gamestop, but with the Reward Zone and RZ Gamer's Club, there's really no reason NOT to buy my games at Best Buy (double negative intended).
"One of the ways I gauge a DS game is by recharges. "...Tycho (Penny Arcade)
I guess I must also live by the worst Best Buy in the world, because the last three times I went in there, I brought a written list of PS3 and Wii games, and left empty handed. The last time, I was mainly looking for Broken Sword for Wii, because I'd heard that it dropped to $30, and also Prince of Persia for PS3, because I figured it had probably dropped to somewhere around there. They had neither. And it wasn't because they were out of stock; there was no place on the shelf for them. Broken Sword came out less than 6 months ago, and Prince of Persia came out last December. They're not exactly old.
So yeah, guess where I bought them.
I agree to everything you just said, I was looking at some CE boxes with that thing around them totally getting crushed. And my friend bought bad company like a week ago and they didn't have the case or disc and I was like they really shouldn't charge full price for that shit. maybe like 2 bucks off or something?
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Best B uy used to sell new music CD's for 8 bucks back in the day, and they did it for quite a while. They're doing it to get people in the door. They figure that if you come in there to get a cheap game, you'll pick something else up too.
putting pressure on gs is a good idea, they are extremely leveraged in debt (the EB and funcoland takeovers), and any drop in their fat profit margins would be bad news for their financials.
Being as I prefer shopping at Best Buy, even with their haphazard at best game displays, this is welcome news to possibly see locally. How it makes any sense for them, I don't know, but color me greedy - $5 to $10 saved for me is not something I will turn down.
It would be nice if Gamestop had a competitor that could make them sweat, coughJoecough.
Interesting. The only problem I see with this method is that sometimes there are price differences between GS's used in-store games and used online games. Thanks for letting us know how it works though.
Although I actually like shopping at Best Buy, I'm going to have to side with the other two guys here. Pretty much any sale Best Buy has where games are advertised for $9.99 or less, you are never going to get it unless you are there first thing in the morning Sunday when the sale starts, and even then theres no guarentees. I've missed out on several advertised games because I didn't get there early enough. Whats worst, many times they have less than five copies of an advertised $10 game and thats just bull shit.
I still have a raincheck from April to get Soul Calibur IV for $9.99 but they haven't(and most likely won't) gotten any more in. I'm going to try and use it at another Besy Buy although they told me when I got the raincheck that it's only for that specific Best Buy. Anyway, I need to find someway to let them know that(company wide) advertising cheap games that you have less than 20-30 copies of is a really unprofessional business tactic.
Last edited by The 1 2 P; 08-09-2009 at 05:46 PM.
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